Investor Dispute Resolution with ODR

[By Anchal Raghuwanshi]

The author is a student of Dharmashastra National Law University, Jabalpur.



Financial framework of a country represents the strong and efficient capital market inviting investors from around the world. The need for addressing disputes related to securities market has become crucial in order to have an effective capital market structure in the country.

Investors who have suffered because of the mistakes of unscrupulous works of certain market players deserve a dispute resolution and complaint management system that is accessible, swift, and fair. Acts such as these not only reduce investor confidence but also affect India’s position at the global level. A strong and efficient dispute resolution will guarantee effective capital market operations.

While creating laws and regulations, SEBI’s main objective is to govern and oversee the Indian commodity and securities markets. The regulatory framework of SEBI covers a wide spectrum of market participants, including listed businesses, stock exchanges, brokers, and investment advisers.

The new ODR approach is poised to make resolving disputes more effective and affordable. ODR, which can be done online or in person, leverages technology to help the parties communicate and negotiate. This would increase the effectiveness and efficiency of India’s system for resolving investor disputes and increase its appeal to foreign investors. The objective of this paper is to look into the various facets of India’s Securities and Exchange Board’s dispute resolution process.


In June 2011, SEBI established the ‘SCORES’ centralized web-based complaints resolution system. The goal of SCORES is to provide an administrative venue for dissatisfied investors whose securities market issues have not been handled by the relevant listed company registered intermediary, or recognized market infrastructure institutions.[1] It accepts complaints arising from issues covered by the Securities and Exchange Board of India Act, 1992, the Depositories Act, 1996, the Securities Contract Regulation Act, 1956, the Companies Act, 2013, and rules and regulations made under the aforementioned acts.[2]The SCORE system emphasizes investor advocacy since investors can contact SEBI directly before exhausting other routes of redress. Complaints filed on SCORES are subject to a three-year limitation period from the date of the complaint’s causation date.

In a circular dated March 26, 2018[3], investors were instructed to first address their concerns with the relevant firm before approaching SCORES. According to master circular dated November 07, 2022, the business must file the ATR within 30 days.[4]If an investor is dissatisfied with the entity’s settlement or the entity has not produced an Action Taken Report within 30 days, the issue escalates to SEBI and is addressed by a SEBI Dealing Officer[5].

When investors file a complaint with SCORES, they provide confirmation of the same by self-declaration. A sample research was conducted to determine if investors are approaching businesses first before self-declaring. It has been discovered that around 42% of investors who stated that they approached the business first, really approached SCORES directly[6].

The Dealing Officer will review the ATR upon receipt and, if satisfied, will close the complaint with reasoned closure remarks. If the Dealing Officer is dissatisfied, he may request explanation from the entity and/or the investor. A complaint is considered resolved/disposed/closed only when SEBI disposes/closes the complaint on SCORES.

Once the complaint has been resolved, the investor has the ability to request a review within 15 days if he or she is dissatisfied with the resolution of the complaint.[7] The Division Chief of the concerned Dealing Officer, who handled the usual complaint, handles the review complaint. “Review complaints” are the name given to these types of complaints.[8]


In line with the terms of the Circular of 11 August 2010[9], read with Section 2(4) of the Arbitration and Conciliation Act, 1996[10], SEBI provides for an arbitration procedure for settling disputes between customers and members.

Age, credentials, and expertise in financial services are all taken into account while forming the panel of arbitrators.

When opposed to the usual filing of lawsuits in courts, conflict resolution through arbitration is a more cost-effective way of ADR. If an investor has an account with a Depository participant or a broker, he or she has the option of settling disputes through Arbitration under the SCORES process.

If a Stock Exchange or Depository fails to resolve an investor’s grievance due to a disagreement, the investor may petition for Arbitration under the rules and regulations of that Stock Exchange or Depository. All disputes, claims, or disagreements between investors and stock brokers or Depository participants can be resolved through the Arbitration system.

The steps for Stock Exchange Arbitration are summarised below:

  • First, the Applicant files an Arbitration application to a Stock Exchange; the application is then verified and delivered to the Respondent.
  • Following that, an Arbitrator is selected, and all papers are delivered to the Arbitrator; the Arbitrator then hears both parties’ contentions and issues the award.
  • If a party is dissatisfied, he or she may submit an appeal.
  • Following that, the appeal hearing is held, and the ultimate award is made.

The time restriction for submitting arbitration claims is three years. A single arbitrator will hear an arbitration reference for a claim/counterclaim up to Rs 25 lakhs, while a panel of three arbitrators will hear claims beyond Rs 25 lakhs. The appointment of arbitrators should be completed within 30 days of the applicant’s application being received. Within four months after the appointment of arbitrators, the arbitration shall be finished by issuing an arbitral award. The arbitration facility must be provided at SEBI-designated arbitration centers.[11]Furthermore, if any party to the arbitration is unsatisfied with the award, the party may submit an appeal against the judgement through the Stock Exchange’s Appellate process.

Also, Chapter 15 of the Model Bye Laws of the Stock Exchange[12] contains procedures for resolving securities disputes through the Arbitration and Conciliation process. As part of the Bye Laws, the provisions of the Arbitration and Conciliation Act of 1996 apply.


The proposal to implement an ODR system and extend it to all registered intermediaries in the securities market was accepted by the SEBI board at its meeting on March 29, 2023[13]. For investors to use the ODR mechanism, ODR portal is being built. As a result, investors will have two complimentary ways to pursue redress of their grievance:

SCORES platform: The parameters of investor grievances using SCORES is limited because SEBI does not have the authority to arbitrate on third-party rights or issue particular remedy or compensation.

Online Dispute Resolution Platform: The realm of investor grievances can be broadened through ODR since the arbitrator participating in the procedure can decide between the parties and make an award. It also provides an opportunity for the parties to reach an acceptable conclusion.

On July 31, 2023, SEBI issued a Circular on ‘Online Dispute Resolution of Disputes in the Indian Securities Market[14]’ making ODR the default mechanism for resolving almost all disputes arising out of securities market transactions. The desire to extend the reach of the dispute resolution process to all market players while making it exponentially more inexpensive, accessible, and responsible is driving its adoption.

This Circular was produced in response to the Securities and Exchange Board of India (Alternative Dispute settlement Mechanism) (Amendment) Rules, 2023[15], which were published on 3 July 2023 and altered the dispute settlement provision in a number of securities-related rules. The use of ODR to settle securities market disputes has revolutionized both the procedure and the timescales for resolution. The method in which ODR has been implemented is also groundbreaking, setting the worldwide standard for dispute settlement.

The SEBI ODR Circular allows ODR institutions capable of conducting limited in duration online conciliation and/or arbitration in compliance with the Arbitration and Conciliation Act, 1996 while using online/audio-video technology to resolve disputes originating from securities market transactions. The Circular establishes standards for the accreditation of ODR institutions in order to ensure the implementation of suitable quality controls.

It also calls for the use of ODR in a wide range of cases, including those involving disputes between investors/clients as well as listed companies (which includes their registrars and share transfer agents) and any of the specified intermediaries/regulated entities in the securities market. Listed companies/specified intermediaries/regulated entities or their clients/investors may refer to any unresolved dispute.

 The SEBI ODR circular stated that, “The MIIs shall, in consultation with their empanelled ODR Institutions, establish and operate a common ODR Portal.”[16] The ODR portal must be connected to the SEBI SCORES portal and the SEBI Intermediary portal.

It provides that all Market Participants must enlist in the ODR site within the timeframe specified in the Circular.  They are also obligated to explicitly convey to the investor/client the availability of the SCOREs portal and the ODR site to settle their disputes if the investor/client is dissatisfied with the Market Participant’s answer.[17]

The ODR site will have the following features: enrolling an investor/client or market participant, making a complaint, uploading documents and papers, and receiving a progress update on the complaint from the ODR institution.

A complaint/conflict initiated through the portal will be forwarded to an ODR institution accredited by a MII. The market-wide allocation mechanism will be a round-robin method governing the distribution of each such disagreement among all such accredited ODR institutions.

Additionally, all cases appealable to the Securities Appellate Tribunal under Section 15T of the SEBI Act of 1992[18], Sections 22A and 23L of the Securities Contracts (Regulation) Act of 1956[19], and Section 23 A of the Depositories Act of 1996[20] are outside the purview of ODR.


The Circular establishes a tiered conflict resolution procedure, with Conciliation to be the first of the official dispute resolution processes conducted on the ODR platforms at the expense of the MIIs.

  • The ODR institution must appoint a conciliator within 5 days of receiving the referral of the complaint/dispute.
  • A conciliator has 21 calendar days (extendable with the parties’ cooperation) to complete the conciliation procedure.
  • If the conciliation succeeds, a settlement agreement will be legally completed and stamped electronically, as permitted by law. If it fails, the conciliator nevertheless delivers his/her opinion on the “admissible claim value,” which remains the standard for any more settlement of the dispute.[21]


If conciliation is unsuccessful, an investor/client may pursue online arbitration (administered by the ODR institution that also guided the operation of conciliation) following the conclusion of a conciliation process once the matter was successfully resolved via such process, susceptible to the payment of fees that are necessary for online arbitration.

  • When an investor/client/MP requests online arbitration, the ODR institution must assign a single independent and unbiased arbiter from the panel of arbitrators in 5 calendar days of the request. If the total claim exceeds Rs. 30, 00,000, the issue will be sent to an Arbitral Tribunal of three arbitrators. [22]
  • The parties are not entitled to withdraw once an arbitrator has been chosen.
  • The arbitrators must issue an award within 30 days of their appointment.


The significance of a functioning capital market cannot be understated, and it is crucial to promptly resolve consumer complaints and problems with the securities market. Investors want accessible and impartial complaint resolution processes, particularly as the capital market’s complexity and competition increase. SEBI, which is responsible for regulating India’s capital market, has established tools like SCORES and ODR to increase investor confidence and efficiently settle disputes.

Investors can express their complaints through SCORES’s online portal and request SEBI’s intervention in order to have their issues resolved. The platform emphasizes the significance of businesses accepting responsibility for addressing investor concerns, even while SEBI’s jurisdiction to arbitrate third-party rights is restricted.

SEBI’s adoption of ODR is among the first of its sort internationally, with statutory conciliation and arbitration with private ODR participants provided for.[23] It is a revolutionary move with the potential to radically upset the landscape of ADR and ODR not only in India but internationally, and to open the door to far-reaching reform. This mechanism’s approach to arbitration is not only ground-breaking but also inexpensive.

In conclusion, SEBI’s initiatives such as SCORES and ODR underscore its dedication to maintaining a transparent, fair, and efficient capital market by empowering investors to voice their concerns and ensuring a robust mechanism for resolving disputes in a timely and effective manner.


[1] CIRCULAR SEBI/HO/OIAE/IGRD/P/CIR/2022/0150 dated November 07, 2022, available on:,

[2] Available on:

[3] Available on:

[4] CIRCULAR SEBI/HO/OIAE/IGRD/P/CIR/2022 Available on:

[5]Mansukhlal Hiralal & Company, SEBI Update: New Alternative Dispute Resolution Mechanism, available on:–dispute-resolution/1354654/sebi-update-new-alternative-dispute-resolution-mechanism

[6] Ibid.

[7] Supra note 1.

[8] Ibid.

[9]CIRCULAR CIR/MRD/DSA/24/2010, Available on:

[10] The Arbitration and Conciliation Act of 1996, No. 26, Acts of Parliament, 1996, available at:

[11] Supra note 4.

[12] Available on:

[13] Available on:; see also, Memorandum For Online Dispute Resolution Mechanism,Available on:

[14] CIRCULAR SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131, available on:

[15] Available on:

[16] Supra note 14.

[17] Mansukhlal Hiralal & Company, SEBI Update: New Alternative Dispute Resolution Mechanism, available on:–dispute-resolution/1354654/sebi-update-new-alternative-dispute-resolution-mechanism

[18] The Securities Exchange Board of India Act, 1992, available on:

[19] Securities Contracts (Regulation) Act, 1956, No. 42, Acts of Parliament, 1956, available on:

[20] Securities and Exchange Board of India Depositories Act, 1996, available on:



[23]Vikas Mahendra, Shweta Devgan, SEBI mainstreams Online Dispute Resolution, available on:


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